Graphs of the day (2). Mediterranean current accounts, 2012 third quarter

Today, Eurostat published new data on current accounts, third quarter of 2012. For the first time since the introduction of the Euro the combined current account of Spain, Greece, Italy and Portugal as well as the current accounts of the individual countries showed surpluses (caveat: not seasonally adjusted!). Good news? Yes and no. The current account deficits caused by reckless inflows of capital and flimflam lending and borrowing after 2004 were clearly unsustainable – this had to change. But the bad news is that the surplus is mainly caused by ueber-unemployment, austerity and the connected decrease in expenditure and not so much by an increase in exports. Turkey might be an alternative. After 2008 the Turkish central bank lowered its policy rate with about 10% which contributed to an economic boom, a whopping 15% increase in employment (compared with the at present 15% decline of employment in Greece), a connected increase in expenditure and, as a consequence, unsustainable large current account deficits. It however seems to escape the ‘mediterranean curse’ as it’s deficit shows sustained improvement, despite deeply, deeply deflationary policies in the Eurozone.

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